Have equity in your home? Want a lower payment? An appraisal from Cookus Enterprises can help you get rid of your PMI.A 20% down payment is typically the standard when purchasing a home. Because the risk for the lender is often only the remainder between the home value and the amount due on the loan, the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and natural value changes in the event a purchaser defaults.During the recent mortgage boom of the mid 2000s, it was widespread to see lenders only asking for down payments of 10, 5 or sometimes 0 percent. A lender is able to endure the added risk of the reduced down payment with Private Mortgage Insurance or PMI. PMI guards the lender in the event a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. Because the $40-$50 a month per $100,000 borrowed is lumped into the mortgage monthly payment and oftentimes isn't even tax deductible, PMI is costly to a borrower. It's money-making for the lender because they obtain the money, and they get the money if the borrower defaults, separate from a piggyback loan where the lender absorbs all the losses.
How homebuyers can keep from bearing the cost of PMIThe Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the original loan amount. The law designates that, upon request of the home owner, the PMI must be released when the principal amount reaches just 80 percent. So, keen homeowners can get off the hook a little earlier.It can take many years to get to the point where the principal is only 80% of the initial amount of the loan, so it's necessary to know how your Texas home has increased in value. After all, all of the appreciation you've accomplished over time counts towards removing PMI. So what's the reason for paying it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not conform to national trends and/or your home might have gained equity before things declined. So even when nationwide trends signify falling home values, you should know most importantly that real estate is local. The hardest thing for almost all homeowners to figure out is whether their home equity has exceeded the 20% point. A certified, Texas licensed real estate appraiser can surely help. It's an appraiser's job to keep up with the market dynamics of their area. At Cookus Enterprises, we're experts at analyzing value trends in Mansfield, Tarrant County, and surrounding areas, and we know when property values have risen or declined. Faced with data from an appraiser, the mortgage company will most often eliminate the PMI with little trouble. At that time, the homeowner can retain the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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